house purchase advice/questions

[xaeniac]

I am looking to purchase a house, but don't know anything about how to go about it, the cost incurred, and many other questions such as should I put down a 20% deposit or keep the 20% for purchases after the home purchase( heard conflicting reports on this) Should I get a buyer's agent? What books/ forums would you recommend that I could read to get additional information on this topic?

 

[NogginBoink]

www.fool.com
www.bankrate.com

 

[HomeBrewerDude]

check with your bank or credit union to see if there is any first time home buyer literature, seminars, or shows in your area.

figure out ball park figure of how much house you will be able to buy.

shop for mortage rates, points, loan type
get pre-approved for upto an amount you're comfortable with

start driving through neighborhoods to find out how much house your budget will let you buy

make a list of any features you must have or avoid....keep it reasonable and prioritze them.

interview 2 or 3 buyer agents and find one that 1) you feel like you can communicate well with, 2) trust and 3) has the time for you

look at a few houses,

make an offer on one you like.

get the house inspected

renogiate if needed

get the house appraised

close and move-in

 

[Ornery]

• Location
• Location
• Location...

Since you don't have a house to unload, there's no reason to drag around a useless real estate agent with you. Locate houses for sale in the locations of your choice, and contact the listing agent/broker directly. Since you aren't dragging 3.5% worth of dead weight along, you'll have that much more room to bargain.

Don't let your ideal home slip away because of a few thousand dollars. If you find the perfect place in a perfect location, be ready to pay what they're asking. You'll be kicking yourself forever if it gets away.

 

[Wingznut]

Originally posted by: OrnerySince you don't have a house to unload, there's no reason to drag around a useless real estate agent with you. Locate houses for sale in the locations of your choice, and contact the listing agent/broker directly. Since you aren't dragging 3.5% worth of dead weight along, you'll have that much more room to bargain.

Don't let your ideal home slip away because of a few thousand dollars. If you find the perfect place in a perfect location, be ready to pay what they're asking. You'll be kicking yourself forever if it gets away.

I've bought and sold two houses now and please correct me if I am wrong, but...

If the seller has an agent, he is paying ~6% fees to him. If you have a buyer's agent as well, they split that 6%. So either way, 6% is going to leave the seller's hands and there is no extra "bargaining" without a buyer's agent.



My best advice is to get a good mortgage broker via recommendations. Real estate agents (both buyer's and seller's) are just salesmen, no better than a used car salesman. They both profit on the final sale of the house, so neither has a vested interest to negotiate the buyer a good deal.

 

[Wingznut]

If you can put 20% down, that completely rocks. With less than an 80% loan to value ratio, you do not have to pay personal mortgage insurance. (Personally, I think PMI is a complete ripoff, since it's a very secured loan.)

Like I said, get a good mortgage broker... They will find ways to get you out of paying PMI.

 

[Ornery]

...there is no extra "bargaining" without a buyer's agent.

WTF would he need somebody holding his hand? Of course, if he does opt for an agent, that agent is going to have his hand out to the tune of 3.5%... and for what?! A couple hundred dollars is one thing, but 3.5% of $150,000.00... FOR WHAT?!!!!

 

[Wingznut]

Originally posted by: Ornery
...there is no extra "bargaining" without a buyer's agent.

WTF would he need somebody holding his hand? Of course, if he does opt for an agent, that agent is going to have his hand out to the tune of 3.5%... and for what?! A couple hundred dollars is one thing, but 3.5% of $150,000.00... FOR WHAT?!!!!

Like I said... There's ~6% going out to the agents. If both parties have an agent, then they split that 6%. If only the seller has an agent, then there's still 6% going out.

Your theory only applies if the seller has no agent.

 

[Ornery]

If you don't drag another useless salesman into the mix, half of that 7% fee could go in the buyer's pocket, instead of a second agent.

 

[Rudee]

Pre-Approval-> Viewing->Offer/Negotiation->Inspection->Acceptance/Decline of offer->Wakthrough->Close

 

[Wingznut]

Originally posted by: Ornery
If you don't drag another useless salesman into the mix, half of that 7% fee could go in the buyer's pocket, instead of a second agent.

Let me try and explain it a different way...

If the seller has an agent and the buyer does NOT have an agent, then the seller's agent gets all 7% of the fees. If both parties have an agent, then they split those same 7%. So, by not having a buyer's agent isn't freeing up any cash to bargain with.

One way or another, if the seller has an agent, there will be 7% going out. There is no way the seller's agent is going to barter with his share. I suppose one coule hardball it and say something like "give me a 3% discount or else I'll get a buyer's agent to take 3.5%"... But that's kind of silly.

A house is going to sell for market value, no matter what the agents fees are.

 

[Ornery]

There is no way the seller's agent is going to barter with his share. I suppose one coule hardball it and say something like "give me a 3% discount or else I'll get a buyer's agent to take 3.5%"... But that's kind of silly.

Fvck that, I'd play hardball just on pinciple! WTF, I'll bring aunt Martha (everybody & their brother is an agent these days) in to take a cut, if the seller's agent won't play ball. I'll be DAMNED if he keeps it all!


Negotiate Your Real Estate Agent's Commission

• Explore payment options (beyond just straight commissions) with agents. For example, you can discuss a flat fee; a dual fee in which you pay 5 percent if the home is sold with a buyer broker and 3 percent if sold only by the listing broker; or pay consultant fees on an as-needed basis.

It Pays to Negotiate Your Agent's Commission

• When buyers approach a traditional real-estate agency, they are often assured that the agent's help is free. That's true in the sense that the home buyer doesn't normally pay the agent. But the service isn't really free because home sellers factor in the cost of commissions when they price their homes. In fact, some sellers are willing to lower the price if you show up without an agent.

 

[dullard]

For almost all people, you want 20% down on your mortgage. How you get that 20% is debatable. Many, many people starting out begin with a small downpayment and a separate loan for the rest of that 20%. There is nothing wrong with that method, other than a bit higher interest rate for that second small loan.

The buyer's agent is certainly debatable. When it comes down to the negotiations, suppose the buyers and sellers are bickering over a couple hundred dollars. It is definitely in the seller's agent's best interest to get the deal done before he loses the business. Thus the seller's agent often will cut his/her own take a couple hundred dollars just to get the deal to close. But if the buyer has an agent, there just isn't room to do that. So yes, you may lose a couple hundred by using a buyer's agent.

However, a buyer's agent has many benefits. Often they are helpful in so many ways:
1) Can spot potential problems that you never thought about saving you thousands.
2) Can narrow down your search saving you countless hours (and time = money).
3) Can help you get good contracts in your favor including sneaky terms that you might not have thought about. For example, a coworker of mine is closing on a house in 2 days. His buyer's agent got in a clause that the seller has to fork over $750 for repairs and in subsequent edits added that ugly wallpaper is a necessary repair. The seller didn't realize that and its an instant and free $750 for my coworker to take down wallpaper.
4) Greatly removes the headaches of coming up with a contract. That alone is worth the possibility of losing a couple hundred on a deal.

If you don't like your buyer's agent, then dump him/her. No harm done at all.

I personally would find out what you are approved for and go significantly less than that. Suppose you are approved for $1500 a month payment. Get a house for $1250 a month in payments. Then you have plenty of money for emergencies, fun, minor remodeling work, or furniture. Don't keep back a ton of money for purchases since you will essentially be paying a 6%+ loan on this money when you could get furniture interest free for up to 2 years. 6% or 0%, 6% or 0%, you decide.